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Wed 12 Jan 2011, 08:43 GMT

China Cosco eyes bunker acquisition

China Cosco Holdings Co. Ltd. is reported to be interested in buying a marine fuel company as part of its asset purchasing strategy in 2011.

The share value of China Cosco jumped by as much as 6.4 percent yesterday - the largest intraday gain since January 11th 2010 - on news of potential asset purchases and an improved outlook for container shipping.

Analysts said yesterday that China Cosco could buy oil tankers, shipyards and a bunker supply company from its parent China Ocean Shipping (Group) Company (Cosco Group) as China encourages state-controlled firms to inject more assets into listed units.

Cosco-owned bunker companies currently include China Marine Bunker (PetroChina) Co., Ltd. (Chimbusco), a 50-50 joint venture between Cosco Group and oil giant PetroChina Company Limited. Chimbusco is China's largest physical supplier of marine fuel by volume. Towards the end of last year the company was reported to be interested in setting up a physical supply operation in the world's largest bunker port, Singapore.

Singapore-based Sinfeng Marine Services Pte. Ltd. was established as a wholly owned subsidiary of Hong Kong's Cosco International Holdings in November 2009. It is mainly engaged in the provision of marine fuel and related services including marine bunker supplies, trading of oil and oil related products and brokering services for clients.

Double Rich Ltd, a Hong Kong-based bunker oil trading and supply company, is 82 percent owned by Chimbusco and 18 percent owned by Cosco International.

Citigroup Inc. yesterday upgraded China Cosco stock from 'hold' to 'buy' following what was referred to as "a fundamentally improving container shipping outlook". Analysts said China Cosco may benefit from a rebound in container rates next year and a seasonal rise in dry bulk rates after next month’s Lunar New Year holidays.

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